After your offer to buy a home has been accepted, it's time to lock down all the details and close the deal. With support from a qualified team, and by staying on top of key actions, you can help ensure that you’re prepared for closing day.
The closing period begins once your offer is accepted and will typically last 30 to 45 days, until you provide your final signature on closing day. On closing day, also known as settlement, you’ll sign documents, pay the seller for the property and get the keys to your new home.
By taking these five steps before closing day, you can help ensure that the closing process goes smoothly.
Work with a Qualified Team
When: It’s a good idea to involve your whole team early in the buying process to get familiar with you and your needs.
The closing process can be complex, which is why it’s important to assemble a team of experts to guide you. Some states require attorneys for real estate transactions, while other states allow an escrow agent or title settlement agent, also known as a closing agent, to handle these duties.
For help finding a reputable real estate attorney or closing agent, try asking for recommendations from friends, family and colleagues. You can also check the Better Business Bureau for complaints and to read others’ reviews.
Your real estate agent may also have suggestions, but make sure that the service provider you choose is reliable and offers the best deal. Rates for closing services will also vary among agents, so ask for quotes beforehand.
Secure Your Closing Funds
When: You should know how much you’ll need to pay at closing once you receive a loan estimate three business days after completing your loan application.
The upfront costs of homeownership extend beyond your down payment. Closing costs, which can also be called settlement fees, are expenses that you will pay to finalize your mortgage. Closing costs vary, but you can expect to pay 2%-5% of the loan amount.
Your lender will outline your closing costs in your loan estimate so that you are prepared for any additional fees. Don’t forget to compare your loan estimate to your closing disclosure, which your lender will provide three days before closing, to make sure there are no unexpected changes.
Complete a Title Search
When: A title search is typically conducted after the seller has accepted your offer.
Before the property is legally transferred to you, the home must have a clean title. This means there are no claims on the property, such as judgments, liens or bankruptcies, that could become an issue once ownership of the home is transferred from the seller to you. The clean title gives you peace of mind that you have full ownership of your new home before you close.
During closing, your lender will request a preliminary title search report from a title company. Check with your lender to make sure a title search has been completed so that you aren’t left with any last-minute surprises.
Request a Final Walk-Through
When: You should request to do a formal walk-through of the home 24 hours before closing.
During the formal walk-though, you and your real estate agent can certify that everything is in proper order before you finalize the purchase. You will want to double check that all agreed upon repairs have been completed and the seller has completely vacated the property.
If there’s an issue you see at the final walk-through — such as trash or debris left behind, a broken window, or a missing item that was part of your sales contract — your attorney or escrow agent may ask for additional funds from the seller at closing so that you can deal with the issue.
Read Closing Documents Before the Closing Meeting
When: At least a few days before the closing meeting, ask your attorney or escrow agent for the documents you’ll be signing.
Buyers typically don’t have time to read all documents thoroughly at closing. Ask your attorney or closing agent for the closing documents ahead of time so that you have ample opportunity to review them at your own pace.
In advance of the closing meeting, your lender will also work with you to make sure you understand the costs and terms of your loan.
To learn more about what to expect at closing, visit My Home by Freddie Mac®.